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Jupiter still leaking other people's money

Jupiter’s results have all the morbid fascination of a space shuttle crash.
July 30, 2022
  • New chief exec inherits a shrinking business 
  • Different ownership seems a distinct possibility

Headlines in recent weeks have not been kind to Jupiter Fund Management (JUP). These results were last overseen by acting chief executive Andrew Formica as he leaves early to spend more time at the beach. That meant the half-year results underlined all of Jupiter’s problems, without having the management in place that can offer investors some solutions. Jupiter said that Matt Beesley, who is currently chief investment officer, will outline his plans for turning the company around later in the year.

In the meantime, the results showcased, if that is the appropriate term, Jupiter’s many issues. Chief among these is the persistent problem that net leakage of funds shows no sign of abating in a now falling market - net fund outflows totalled £3.6bn in the half. This has been a persistent issue for the past three years and one reason seems to be the over-concentration of funds with a relatively small group of active fund managers; every time there are personnel changes, investor money flows out the door.

The problem for new management is that reductions in assets under management (AUM) have a direct impact on group profitability. For example, the decrease in AUM to £54bn, from £59bn last time, knocked 2 basis points from net revenue margins as the outflows affected higher margin management business disproportionately.     

Jupiter is currently priced for scrap and the next chief executive has a real fight on his hands to turn the situation around. Until there is more clarity on how he intends to do this, with many in the market openly saying that this is likely to be under new ownership, there is nothing to do but wait. Hold.

Last IC view: Hold, 203p, 25 Feb 2022

JUPITER FUND MANAGEMENT (JUP)  
ORD PRICE:123pMARKET VALUE:£ 680mn
TOUCH:123-124p12-MONTH HIGH:290pLOW: 117p
DIVIDEND YIELD:13.9%PE RATIO:6
NET ASSET VALUE:155p*NET CASH:£165mn
Half-year to 30 JunTurnover (£mn)Pre-tax profit (£mn)Earnings per share (p)Dividend per share (p)
202124757.08.707.90
202222618.82.607.90
% change-9-67-70-
Ex-div:11 Aug   
Payment:31 Aug   
*includes intangibles of £614mn, or 111p a share